Indus Towers Ltd
NSE:INDUSTOWER
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Indus Towers Ltd
Earnings Call Analysis
Q1-2025 Analysis
Indus Towers Ltd
Indus Towers has kicked off the new financial year with a solid performance, carrying the momentum from the previous year into the first quarter. The company added 6,832 co-locations on its towers, contributing to a 4.3% year-on-year increase in gross revenues, which reached INR 73.8 billion. The core revenue from rentals grew by 7% year-on-year, driven by strong co-location additions and loading.
The company's EBITDA saw impressive growth, increasing by 29.4% year-on-year to INR 45.5 billion. This was supported by a write-back of provisions for doubtful debts and the collection of 100% of the monthly billed amount from a major customer. The EBITDA margin improved significantly by 11.9 percentage points year-on-year to 61.6%. The reported profit after tax grew by 42.9% year-on-year to INR 19.3 billion. Adjusted for provision write-back, the profit after tax remained largely flat due to higher seasonal energy costs.
Indus Towers reported strong operational performance as tower additions and co-location numbers continued to rise. The company generated free cash flow of INR 18.7 billion during the quarter, benefiting from higher collections and lower capital expenditures. Trade receivables decreased by INR 7.3 billion owing to improved collections. Indus Towers is optimistic about further improvements in cash flow, thanks to the ongoing collection of overdue amounts.
Reducing diesel consumption has been one of the key focus areas for Indus Towers, with a 7% reduction year-on-year in the first quarter. The company's commitment to sustainability was further demonstrated by the installation of nearly 7,000 solar panels. These efforts are part of a broader initiative to expand the renewables portfolio and enhance network uptime, which stood at a high level of 99.97% despite weather disruptions.
Indus Towers anticipates a continued strong performance in the coming quarters, buoyed by network expansions and 5G rollouts by major customers. The management expressed confidence in the company's ability to sustain growth and profitability. The recent buyback proposal approved by the board highlights the management's belief in the strong fundamentals and future outlook of the business. The company remains committed to distributing cash efficiently to shareholders, either through dividends or buybacks, depending on the free cash flow situation.
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Good afternoon, ladies and gentlemen. I'm [indiscernible] moderator for this conference. Welcome to the Indus Tower Limited First Quarter ended June 30, 2024. [Operator Instructions]
Present with us on the call today is the senior leadership team of Indus Towers. Before I hand over the call, I must [indiscernible] you that the overview and discussions today may include certain forward-looking statements that must be viewed in conjunction with the risks that we face. I now hand over the call to our first the speaker of the day Mr. Prachur Sah. Thank you, and over to you, Mr. Sah.
Thank you, Sunita, and a very warm welcome to all participants. Joining me today are my areas Mr. Vikas Poddar, CFO; Mr. Tejinder Kalra, COO; and Mr. Dheeraj Agarwal, Head Investor Relations on the call.
I am pleased to present our business performance for the quarter ended June 30, 2024. We are happy to see the robust performance we delivered in the previous financial year, continuing the first quarter of this year as well. Our tower additions continue to be strong, driven by our ability to maintain a high share in the rollouts of one of our major customers.
We would also like to highlight that you have made cautious again the past overdue for the third consecutive quarter from a major customer, while sustaining 100% collection against some of [indiscernible]. [indiscernible] Vodafone Plc has indicated monetizing its stake in Indus Towers in the past and sold off its 18% stake during the quarter. One of our major customers, Vodafone Idea, [indiscernible] funding and has also announced its plan to raise debt.
Given these developments, we remain confident of collection of our past dues and participating in the network expansion of the said customer. Before I [indiscernible] to specific areas of the business, I would like to take a move to appreciate the [indiscernible] and commitment of our sales force towards helping Indus achieve its vision of enabling connectivity across the nation.
During the quarter, our teams on the ground, we have challenging weather conditions, including heavy rains to install towers in the [indiscernible] regions of [indiscernible]. There spirit truly embodied our mission of transforming lives through the communication. On the regulatory front, the government continues to take measures to speed up the deployment of telecom to structure across the country while keeping sustainability in view.
During the quarter, certain [indiscernible] of the telecommunications [indiscernible] 2023 were notified, including those related to public safety, same ownership and [indiscernible] of it for telecom infrastructure and came into effect on 26 June. As per the recent announcement, government plans to notify all rules and provisions of the act within [indiscernible] open access policy introduced last year has been adopted by more than 15 states, and we continue to work with various ministries for faster implementation of the same. We also engaged in discussions with the Ministry of Petroleum [indiscernible], IDL and [indiscernible] to implement [indiscernible] natural gas solutions at our sites in order to reduce our deeper consumption.
Moving on to 5G. The total number of 5G-based transceiver stations [indiscernible] deployed [indiscernible] at almost 450,000 after an accelerated rollout by the operator within 2 years of 5G spectrum auction. We are pleased to see our loading revenues continue to increase and [indiscernible]. After reaching a certain level of penetration probably over the next 2 to 3 years, 5G rollouts would require addition of towers primarily in the form of [indiscernible] to address [indiscernible], which would aim the growth.
We believe that we are well replaced to leverage our expertise in order to capitalize on this opportunity. The adoption of 5G by the end customer is also expected to be swift as highlighted by statistics mentioned in the Annex [indiscernible] report. As per the report, global 5G subscriptions are expected to reach almost [ INR 5.6 billion ] by 2029, accounting for approximately 60% of overall mobile subscriptions.
India, subscriptions reached 119 million by 2023 and estimated to touch 840 million by 2029, accounting for approximately [indiscernible] of total mobile subscriptions. Fueled by the rapid rollout of 5G and the continuous shift of users from 2G to 4G networks, data consumption continues to experience significant. For the top 3 operators, the total data consumption grew by 29% year-on-year for the March quarter, the highest growth business in the last 8 quarters. The average data consumed per user format grew 18% year-on-year, 25 GB in the same period. The rapid growth in data usage, coupled with the widespread adoption of 5G, [indiscernible] the growth opportunity for the passive infrastructure sector. Being the leading passive infrastructure player in the country, we remain well positioned to address the resulting demand.
Moving to operational performance. Pleased to see that our tower additions continue to be strong, underpinned by robust demand from one of our major customers and our efforts towards sustaining our market share in the business of the customer. We added 6,174 [ macro towers ] and 6,340 corresponding co-locations in Q1. The total macro towers and co-location increased by 13.9% and 7.8% each on a year-on-year basis. 2 lakhs 25,910 and 3 lakhs 74,928, respectively. Our tenancy ratio continues to be industry leading at 1.66.
Addition of co-locations of Indus Towers stood at 492 in Q1 and the overall base increased to 11,170 co-locations. Including [indiscernible] towers, net co-location additions were at 6,832 in Q1 versus 8,600 in Q4. NDS to the progress we have made on our 4 key strategic priorities, mainly market share, cost efficiency, network of time and sustainability.
Firstly, regarding the market share. As highlighted earlier, our quarterly macro and co-location additions continue to be robust. We remain our customers' preferred partner for their [indiscernible], which coupled with the initiatives we have been taking, have helped us sustain our market share. During the quarter, we continued to work towards strengthening our partner ecosystem further supplemented by the digital solutions we have to increase our penetration in urban areas. We have space constraint. We took steps towards taking a product offering to offer the best value proposition to the customer. We anticipate continued [indiscernible] by a major customer [indiscernible] providing us with growth opportunities.
In addition, we are making progress on deployment of building [indiscernible] solutions, enabled by [indiscernible] and capability building delivered in a quick turnaround time. Moving to cost efficiency, wherein we continue to take initiatives towards optimizing our [indiscernible] capital expenses. Reducing our diesel consumption has been one of our key focus areas, and we managed to reduce our business consumption by 7% in Q1 on a year-on-year basis. I think this reduction was a continued focus towards expanding our renewable energy portfolio. After setting up 14,000 solar sites last year, we continued the momentum and set up close to 7,000 solar panels in Q1.
Supplementing this was the electrification of non-electrified sites and conversion of sites of the indoor to outdoor. Additionally, prudent site and product selection continues to be a [indiscernible] and help us tighten our [indiscernible]. Continuous improvement in [indiscernible] productivity in technological interventions are also helping us optimize our network business cost.
With regards to CapEx, we are working towards using more cost efficient [indiscernible] with greater longevity in order to reduce overall cost. Thirdly, network uptime, important metric for the consumer. We'll continue to improve the uptime and delivered a high level up time of 99.97% despite weather disruptions in Q1. We saw severe flows and heavy rains in the area of East Bengal, Kerala and the Northeastern seas. I would like to [indiscernible] indication and commitment of our [indiscernible], which continue to raise the benchmark for Indus.
Now moving to ESG, focusing organization. On the environment front, we continue to make progress in our journey towards limiting our ESG missions. As I alluded to earlier, our strong solar site additions in the quarter have taken the overall count to over 21,000. We continue to take initiatives to encourage the transition to electric vehicles for the business travel needs for both our employees and partners. We also recently introduced the carpooling application for employees for the work commute to reduce our [indiscernible] footprint.
To ensure sustainable practices across the value chain, we continue to monitor the [indiscernible] practices of our partners and happy to see improvements [indiscernible]. With regards to our focus on diversity and inclusion, we are pleased to see a gender diversification remain strong at [indiscernible] in Q1. In addition to the numbers, we are looking to be an equal opportunities for women across all levels from field operations to the management.
As part of [indiscernible] activity, we partnered with local NGOs to conduct a [indiscernible], where up to 200 kilograms of [indiscernible]. Our digital transformation in association with NIIT Foundation continues to educate and are still [indiscernible]. Before I hand over to Vikas, I would like to state the buyback proposal that is approved by the Board is an indication of management's belief in the sound fundamentals of the business, its future outlook and our commitment to generate value for our shareholders. I will now request Vikas to take you through the financial performance of the quarter ended June 2024, and I look forward to your questions. Over to you, Vikas. Thank you.
Thank you, Prachur, and good afternoon, everyone. I'm pleased to share with you the financial results for quarter ended 30th June 2024. So to begin with, I would like to reiterate our robust operational performance, wherein we added 6,832 co-locations on our towers, including lean towers during the quarter.
Moving to the financial performance for quarter 1 FY '25. Gross revenues increased by 4.3% year-on-year to INR 73.8 billion. wherein the core revenues from rental grew by 7% year-on-year to INR 46.4 billion, driven by the strong co-location additions and loading. On a quarter-on-quarter basis, our reported gross revenue and core revenue from rentals were up by 2.6% and 1.3%, respectively. Our reported EBITDA increased by 29.4% year-on-year and by 10.8% quarter-on-quarter to INR 45.5 billion. EBITDA margin was up by 11.9 percentage point year-on-year and 4.5 percentage points quarter-on-quarter to 61.6%. In line with the trend witnessed in the past 2 quarters, we collected a sum against the past overdue, along with the collection of 100% of the monthly build amount from a major customer. This has resulted in a write-back of provision for doubtful debt and aided our profitability for quarter 1.
Adjusted for an overall provision PAT of $0.6 billion, EBITDA increased by 5.5% year-on-year and was largely flat quarter-on-quarter due to higher seasonal energy costs in quarter 1 as electricity outage increases in summer months. Reiterating what Prachur had said earlier, we continue to take initiatives to reduce our diesel consumption and work towards addressing the reconciliation issues, which should help minimize our energy costs.
Reported profit after tax grew 42.9% year-on-year and 3.9% quarter-on-quarter to INR 19.3 billion. Please note that quarter 4 of last year had the higher finance income due to the clearance of interest receivable of a major customer. Adjusted for the provision write-back, profit after tax was largely flat year-on-year and declined 10% quarter-on-quarter. The reported pretax return on capital employed and post-tax return on equity for the rolling 12 months were at 20.9% and 25.7%, respectively.
We generated free cash flow of INR 18.7 billion in quarter 1 on account of higher collections and lower CapEx. Our trade receivables decreased by INR 7.3 billion, primarily due to better collections. We continue to engage with our major customers to finalize our payment plan and are seeing a regular collection of our past overview. We are also having positive discussions with the customer on participating in the network expansion plan following its fundraising and expect to see co-location additions this year.
In summary, we are pleased to see the momentum in tower additions witnessed last year and continue to grow in this quarter as well. Our financial performance continues to be aided by strong additions and collection of past dues. We remain optimistic about our growth outlook in view of the network expansion and 5G rollouts by our major customers.
Our cash flow situation should also improve further with a sustained collection of past overdue. With this, I would now request the moderator to open the floor for question and answers, please.
[Operator Instructions] The first question comes from Mr. Sachin Salgaonkar from BofA Mumbai.
Congrats on good set of numbers. My two questions are first question. Again, I just wanted to understand on this buyback a bit more. One way to look at it is we have still not received full deals from Idea. And there was this intention to return back cash to shareholders whenever we receive full dues from Idea. So is it fair to say that whenever Idea is they come back off returns in the past due to Indus. Indus could think about another dividend or another potential buyback to return cash back to shareholders. Is that a fair assessment or something has changed after the recently announced buyback?
I think just to give you more details on the buyback. Of course, the -- there are a couple of reasons, but the -- I think the overall objective of this buyback is, of course, to basically distribute cash. So as you know, we have not been able to pay dividend in the last 2 years. But the fact that we have started collecting our past dues gives us the confidence in the free cash flow improvement going forward. So that's one of the important reasons. The other reason is also the fact that we do see buyback as a tax-efficient way of distributing cash for a large group of our shareholders, especially in the current tax regime because from first of October, with the change in tax regime, things may not be the same. From a company perspective, it certainly improves the financial ratios for us. And it also helps us in preserving our distributable reserves to some extent for any future dividend.
On the second part, basically, I mean, as far as -- after this buyback scenario is concerned, obviously, I mean, like I said, there is more confidence in our free cash flow generation going forward. Our dividend policy continues to be linked to free cash flow. So at the end of the year, we will continue to assess our free cash flow situation. And if situation permits, then there is a possibility of considering a dividend again.
My second question is, again, wanted to understand. I know you guys can't speak on any forward-looking statement. But in a very simplistic manner, the way to look at it is your core revenues for the last few quarters have grown in the range of 7% to 8%. And this is mainly on the back of one customer giving good business. So is it fair to assume that whenever business [indiscernible] should see an acceleration on the growth from current levels and that should also be a bit margin accretive because this is at the end of the day, an incremental tenancy improvement, which we've been seeing.
Sachin, I think all customers -- I mean not [indiscernible] the two customers that you mentioned. I mean, we are looking at opportunities across all the customers. So I think from -- as I mentioned in my commentary, I think the growth looks strong. We have a strong order book for both Indus Towers and depending on how we progress with other customers in terms of tenants as well. Yes, while I cannot give you a percentage, but I think I'm looking forward to continuing strong growth in our [indiscernible]
And such from a margin perspective, of course, I mean, tenancy is a high operating level for us. So currently, it's going to be margin accretive.
The next question comes from Mr. Kunal Vora from PNB Paribas.
First one, on the energy margins, you did mention that there was a problem this quarter, but in the past, what we've seen is that you recovered some of this money to lag. So would you expect this to happen because this quarter energy margins were significantly more negative compared to what you typically see?
Yes, Kunal, I mean, let me just put some perspective on this. I mean, like I had explained earlier also, I think our negative margin is a result of various issues that arise largely because of the difference between our expected cost and what the actual cost is. And like I explained earlier, I think these costs can vary because of several factors, right? There's always seasonality. There is sometimes high diesel consumption due to weather disturbances. There are some timing differences in electricity build and so on. So it is possible that we will have these fluctuations on a quarter-on-quarter basis. However, I think what is really best to do is look at energy from a full year perspective. So this quarter, quarter 1, particularly, we certainly have seasonality issues because of EV availability and some of the cyclone and flight situations in some states and so on. But at the same time, as Prachur said, I think we are sort of still driving a lot of costs out in terms of diesel and so on. So I think from a full year perspective, we will try to achieve whatever [indiscernible], but certainly, first quarter is a bit of seasonality issue.
So on a full year basis, you will expect a slight negative number? Or would you -- do you think it's possible to get to a breakeven on [indiscernible]?
Well, I mean, I think certainly, the long-term ambition would be to sort of reach a breakeven, but there are, obviously, operational issues and so on that we need to keep sorting. So to that extent, I think there will be some negative always. We will just try to build up on that and try to improve that situation year-on-year.
Understood. And second, do you see any synergy benefit between tower business and data center business? There have been some news reports that [indiscernible] might look to merge these business. I'm not asking about your thoughts on the merger, but just wanted to understand your thoughts on whether there is any net synergy benefit at all between the data center and the tower business?
So to be honest, I think, Kunal, it's a bit premature or early to discuss because I don't have any -- have not done any analysis per se from what you can see at the end I mean we are an infrastructure company. So we'll evaluate whatever opportunities are there. If there is something that we value add. But at this time, I won't be able to position to tell you [indiscernible] I mean because we have honestly done from a synergy and opportunity.
Understood. Okay. And just one last one, if I can. You've seen receivables decrease this quarter. As things normalize at Vodafone, Idea, where do you see the receivable deals stabilizing?
Well, like we said, Kunal, we are working on finalizing our payment plan. Obviously, for the last 3 quarters, we have seen election of past dues Sometimes, there are also timing differences in the receivables. So I think where we see this stabilizing is probably a few months down the line. But it's very difficult to put a very concrete time line because the discussions are still ongoing.
I just wanted to understand that like normal receivable [ days ], where do you see the normal receivable days? I mean it might take 2 quarters, 3 quarters, 4 quarters, whatever. But what will be the aspiration in terms of receivable days once things [indiscernible]
Kunal, our aspiration is always to get it done right away. But I think we are working with our customers to see how we can do this quickly. So again, as I said, I won't like [indiscernible] as you've seen good progress in the last quarter. I think we expect to gain more momentum in the coming quarters and hope to [indiscernible] it as quickly as possible.
The next question comes from Mr. Arun Prasath from Avendus Spark.
My first question is on the new tower orders from the Vodafone. So they have indicated they will be expanding debt over base by [ 2030, '40, ] whatever the 40,000,000 numbers that they are talking about. So apart from the offer that we have with these customers, what is our right to win? Because for your competition for your major competition, it's a very high operating leverage play. So they can also offer a lower rate. So how -- what is your strategy to bring maximum market share from this expansion from this customer?
See, I think our strategy remains for all the customers. Even for our major customer, our strategy is to make sure we deliver a commercially competitive offer from a tower point of view. And then for a service that offers a robust uptime and a delivery to them. So I think that remains our focus in terms of [indiscernible] of course, the third element is the turnaround time from the time. Any customer ask us for delivery [indiscernible] we're able to do it now. So not specific to any customer. I think we have made a good impact in FY '24 in our market share compared to FY '23. We significantly changed that way. And I think we want to continue the momentum for all our customers.
What is realistically market share that we can expect from these new tower orders from the customer?
I won't give you a number. I mean -- as a company, our target remains to gain the maximum market share possible, but I would like to quote a number on [indiscernible]
I'm trying to understand, this is the way to gain market share -- retain the market share is [indiscernible] gain because the other party is also fairly good as you turn around [indiscernible] So how we are -- is the discount is the only way to retain the market share?
No, I don't think that's the only way. I think, again -- I think it's a competitive business, so we'll do whatever we can to gain market share.
Just to kind of add a little more to what Prachur just said. So while commercial, of course, is one way of addressing the opportunity. I mean we have a performance that we have delivered over the years to the customer. We have a total cost of ownership that we address to our customer. I think and the speed of delivery and speed to market is another strong element that we have demonstrated to our customers in the past. So given all this is a comprehensive package, which Indus brings to the table, and that is the differentiation the customers also see and the reason why they have given that kind of business to us. So we are banking on that, and we are very confident that we -- this should be a win proposition for us as we go forward as well.
Understood. Just to understand, at least in the past, can you share what is the market share on the macro tower side, our market share [ gains ]?
Market share, you mean -- currently, I think if you see overall tower count perspective, at current our count, we are probably 50% to 60% of the total towers in India. I think that's the number that I would be looking for [indiscernible] I mean that's what the team is telling me here. I think that's the number that we have currently made.
That's on a Pan-India footprint.
So your tower endeavor is to maintain this. That's what I can understand from the [indiscernible]
That's the current status.
I'll move on to my second question. So secondly, if I look at your sharing revenue per operator, it's been constantly decreasing quarter after quarter. But where we can expect this number to be stabilized on a portfolio level.
See, I mean, there are various moving parts why the ARPT number moves. It's not that it has been declining significantly every quarter. I just want to comment on the event in this quarter versus last quarter. And particularly in this quarter, the reason is in quarter 4, we get a lot of these taxes from miscible corporations and property-related taxes and so on. And that gets passed on to the customer. So that gets built to the customer. And accordingly, the ARPT has some uptick from the rates and taxes. In quarter 1, there is a slowdown in these rates and taxes build back to the customer. So as a result, there is this nuance where there are these minor changes from a quarter-on-quarter perspective. And like I said, there are several other moving parts which may not have impacted this quarter, but there's also the mix angle because we don't make only one type of towers. We make several types of towers. So recently, as you know, we have been making towers which are lower CapEx, more frugal, et cetera. And obviously, those have lower rents and so on. So I think there are various things. But broadly, if I were to single out the reason, that's because of the seasonality in rates and taxes.
Right. And regarding the remaining contracts that it to be where the new rate will be passed on will complete by this year or there will be some pending in the next year as well?
Sorry, your question is not clear, Arun?
I was talking about the new contracts where the yields were lower, the remaining contracts. So that is also contributing to the reduction in [indiscernible]
Not in this quarter so much. Like I said, I mean, there are -- every quarter has its own reason. This quarter, the primary reason is the rates and taxes seasonality.
So [indiscernible] what is the pending amount of contracts which is yet to be renewed? Because two years before, we had around 1/3. And then over the last years, we have renewed a majority of that.
[indiscernible] Arun, there are basically some contracts that come up for renewal every year. So if you refer to the past calls, you'll get the answer.
The next question is come from Mr. Aditya Suresh from Macquarie.
My first question is more on the competitive dynamics. But in the context of [indiscernible] looking to acquire or consolidate ATC's operations and given that there are also sponsors for Summit, I was just curious to understand what the dynamics have been for you in terms of tendencies on your network? And how should we think about this going forward?
You mean -- so I think we still maintain a good tenant [indiscernible] I think that's continuing. I don't think there's anything else per se to add.
I guess a question more framed along the lines of had lots of tenancy urban side with Indus. Are we seeing any kind of tenancy erosion there as it looks to kind of expand its tower footprint?
There's nothing out of the ordinary that I can call out.
Yes. I mean, it requires a lot of network reconfiguration and there are various other activities, Aditya. So to that extent, I think, so far, the situation is quite stable. So we don't really see any major dynamics happening.
And the second question was more on the fuel cost, and you mentioned this a few times in the call, but I just want to understand whilst your diesel [indiscernible] down, you kind of spoke about this, just in absolute terms, it seems like in sequentially quarter [indiscernible] fuel cost is up fairly meaningfully, right? What explains this? Sorry if I missed the [indiscernible]
Typically, Aditya, the fuel cost quarter-on-quarter would increase because of the volume that has increased. If you look at the number of towers that we have added every quarter. So absolute cost is going to grow in proportion of the volumes. So the growth of the fuel cost line is an impact from the volume point of view as well.
And is under recovery, which was a question which was previously asked that you would expect to normalize in the upcoming quarter. Is that a fair understanding?
And that's what Vikas earlier explained that Q1 has some seasonality effect, and we'll we see how to make sure that it [indiscernible].
The next question comes from Mr. Vivekanand Subbaraman from AMBIT Capital.
[indiscernible]
Two questions. So Vodafone Plc with 3% shareholding, is it still categorized as a promoter. I just wanted to understand what is the condition under which they will exit as a promoter? Is there a -- I mean, will they still be categorized as promoters with very low shareholding? That is one. And related point is, sir, promoters, have they indicated whether they will participate in buyback or not? So that's question one. Second question is this quarter, you rolled out around 6,000 macro towers higher than last same quarter yet your CapEx is down around 15% year-on-year. So how do you reconcile this? And on a related note, since you have order book visibility from Airtel, can you help us understand how many macro tower or lean sites you are likely to add this year?
I'll try to answer all the 4 questions that you asked. So first, let me go back to the tower count. I think I think CapEx is not always -- CapEx is a combination of towers, upgrades and replacements. So I think compared to last year, I think that may be a combination that we're showing the effect, right? We have no specific reason per se on just because of tower count, the CapEx. I think it's a combination of all these factors that have potential [indiscernible] And I think last year, Q1, there was a larger rollout of 5G as well. That could be a reason for the CapEx on that one. On the other question, what was the...
Yes. So with the [indiscernible] with 3% can be [indiscernible] promoter.
I think as per [indiscernible], I think there will still be called a promoter. There are certain [indiscernible] FHA clauses that are there that gives the time frame. So I believe they would still be called a promoter. I will let you know the exact time line till which that is going to be the case. But I think there will still be called the promoter to a certain date.
So on the other point regarding the promoter participation in the buyback. I think just like other shareholders, even the promoters have the right to participate in the buyback. We have already disclosed that one of our major promoters has decided not to participate. So that is already disclosed. And we'll get to know the full status only when the offer opens eventually.
Right. There's one thing you missed. So this -- you mentioned that these factors, tower adds, upgrades, replacement and perhaps more cabinet space for 5G. These are factors driving CapEx. Would you have visibility on how many towers would you end up rolling out in FY '25 since you may have some sort of order book from Airtel?
I think rather than giving a number because I think the customer plans are in place. I think all I can say is that we continue to have a robust growth plan from not just from one customer from some other customers as well. So I think the momentum, I believe, will continue for the next foreseeable few quarters. So I think if there is any change in [indiscernible] strong order book for the next 3 quarters.
The next question comes from Mr. Sanjesh Jain from ICICI Securities
I got a few clarifications from [indiscernible] comment. Prachur, you said that you were working on some cost efficiency in the batteries. Can you elaborate on that, please?
Satish, I think there are many elements. I think first is the type of battery. Secondly, in the past, technology limited the form factor of the batteries in terms of how big a minimum module of the battery was available. So these are the things that we are trying to work on. The kind of batteries, the form factor of the batteries on how we can modularize the things better. So these are the things that we have been looking to and of course, leveraging our volume from a supply chain point of view to get a [indiscernible] price down. So I think these are 3, 4 things that are potentially helping also we're working towards reducing our cost [indiscernible]
But will this have any material impact on the CapEx number we [indiscernible] tower because of this?
I think [indiscernible] as mentioned, this is part of our cost efficiency efforts while whether it's going to have a material impact or not [indiscernible] we're large infrastructure company. Any savings that we do will always have a material impact, if you can scale it up. So I think from the cost [indiscernible] point of view, this is 1 one the initiatives as I expect, once we deploy it across the scale, [indiscernible] will be material enough over a period of time because it's something that will replace very regularly as well.
Fair enough. Second, on the receivable days, I think over days are being provisioned. That means the receivable is what we see because we said that the outstands are paying on time. That means in terms of what we report in the base receivable is as more sustainable number, right?
Yes, that's right, Sanjesh.
That's a fair assumption, right?
Yes, that's right.
There is no deviation from that [indiscernible] process?
Correct?
My last question, again, a last bookkeeping question a bit. The depreciation, which is excluding the lease liability impact in the depreciation and amortization, that tends to be declining for last 2 quarters, while our CapEx remained to be very healthy. What explains the falling depreciation?
So I think there was some catch-up depreciation in the previous quarter. So to that extent, the depreciation that we reported in last quarter was slightly higher. And that is why it looks flat quarter-on-quarter despite the new rollouts that we have done.
Okay. Because I think in last [indiscernible] 4 quarters, it has been a little volatile and being broadly around INR 960 crores, while cases continues to be healthy. So in terms of modeling, we should be looking this number to be going up sequentially?
So Sanjesh, I think the other important thing to understand is depreciation also has several parts. So there is one which is CapEx driven. There is also the NDS 116 lease accounting and amortization of ROU assets that basically goes and sits in that line. And then as and when we also write off some of the assets because of various flood or damage or things like that, that also goes and sits in the depreciation line. So there could be small fluctuations quarter-on-quarter because of these factors. But broadly, I think if you look at the broad trend, the depreciation has gone up, which is largely driven by fresh investments that we have done and also the fact that we've rolled out much more and as a result of which we have a lot of lease liabilities.
The next question comes from Ms. Tanmay Gupta from Motilal Oswal.
I have two questions. First is when we can expect the tenancy increase from the other customers in the second half of FY '25 or in FY '26? And secondly, on the pricing pressure from any of the competitors, like are we feeling any such kind of pricing pressure due to -- from Brookfield or [indiscernible] wanted to understand on that.
So I think the first question [indiscernible] I think from a tenancy point of view, it all depends on customer planning. So I think we are working with the customer in terms of how we will unwind the receivables and how we can participate in network expansion and then they will start releasing the tenancies. I think I can't give you a date right now, but I think it all depends on the customer requirements and how we can rest with them in [indiscernible] Yes, unfortunately, I can't give you exact date, but that is a work in progress, and we are currently closely engaged with the customer endeavor planning. From a [indiscernible] pressure point of view, I think even if you look at past FY '23, FY '24, we have managed to increase our market share. So I think we have managed to deal with the headwinds of [indiscernible] pressure and remain very competitive in the market. So as of now, I don't expect any new thing coming through, but we'll be ready in case any such thing coming to remain competitive.
So the reason I'm asking because if the competitor provides lesser pricing to Vodafone, is there any probability or possibility whether they will shift to the competitors? Or since we have a larger market share of 50%, as you mentioned, that will restrict them not to shift to the competitors?
I think there were two elements. One is shifting to the competitor and as we mentioned or I'm talking about the new tenancies. I think there is an established base, we have a large company. So I think shifting all its own nuances, and we managed to renew a large portfolio, as Vikas earlier mentioned. We have managed to renew our portfolio [indiscernible] the major customers. So I don't see that much of a risk from that point of view. But we'll be wary of any competitive pressure that comes through, but we remain confident that we are through our product offerings and our solutions, we will remain competitively well placed to grab the market share.
Okay, sir. And sir, whether there has been any discussion with the customer Vodafone Idea, whether they will be enrolling more into macro towers or leaner towers. I mean, any such kind of guidance you can provide?
[ Tanmay ], I think that's a discussion we are currently in the planning phase with the customers. So I can't give you a specific guidance as such, but that is a discussion that is currently ongoing. And once the customer makes plans found, you will see that reflecting in the orders.
The next question comes from Mr. Yash Dalvi from Systematix Mumbai.
So my question was regarding the pending dues from Vodafone. So if you would quantify the amount which was due with [indiscernible]?
Yes. Unfortunately, we can't really discuss customer-specific details here. I think all I can say is the overdues are provided. And as and when we collect the overdues, we are writing back those provisions, but I can't really give very specific numbers.
Anything regarding the time line? Like how long can it pay or how much quarters we can expect to come in?
Yes, [indiscernible] answered earlier the same question earlier that we are working with the customer. We have started seeing [indiscernible]. Our endeavor or our working with the customers to get that [indiscernible] as soon as possible. I mean rather putting a deadline, I think we are seeing progress, but our objective is to get this and more as soon as possible.
[Operator Instructions] At this moment, I would like to hand over the call proceeds to Mr. Prachur for the final remarks.
Thanks, Anita. Our strong operational and financial results reaffirm our core position in the active infrastructure space. We anticipate sustained network expansion, supplemented by the 5G rollovers to continue to drive both tower and co-location additions and [indiscernible]. Given these growth aspects, we are confident in our ability to capitalize on these opportunities, while maintaining our commitment to sustainability. And again, thank you all for joining the call, and have a good day.
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